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Sectoral Debates 2008 - Hon. Karl Samuda

Release Date: 
Thursday, May 22, 2008 - 15:00

Minister of Industry, Investment and Commerce, Hon. Karl Samuda

May 2008

1.0 INTRODUCTORY REMARKS

Mr. Speaker, this marks my 28th consecutive budget presentation in this Honourable House.

I started on this side in November 1980. Needless to say, my political activities have taken many twists and turns since then.

There is a very significant difference on this occasion, as for the first time I have been given the opportunity to speak in this place that I have come to love so very much, as the Minister of Industry, Investment and Commerce.

For this opportunity, I wish to thank you Prime Minister for expressing confidence in me. You know more than anybody what I mean when I say that I will not let you down, nor will I let down the people of Jamaica.

Of course, none of this would be possible without the support of my constituents and my family. I pay particular tribute to my hardworking team of councillors and organizers.

But most of all, I owe what I have achieved to my dear wife, Pauline, who is here today with us.

Mr. Speaker, nothing can take the place of a loving and supportive wife and family.

1.1 The Ministry

Since assuming responsibility for the portfolio of industry, investment and commerce, we have been confronted with many challenges. Not the least of these was simply getting settled in our offices.

We have had to bring nineteen (19) agencies and thirty-five (35) subject areas together as one unit. Included among the subject areas are:

    anti-dumping,
    Companies Act,
    consumer affairs,
    distributive trade,
    investment promotion, ]
    manufacturing,
    science and technology,
    small business development, and
    standards regulation.

I wish to put on record my appreciation to acting Permanent Secretary, Reginald Budhan and the leadership of the Ministry and agencies, who have been extremely tolerant and supportive of our efforts at getting our infrastructure in place, whilst tackling some of the most dramatic challenges in recent years.

There has been no time for on-the-job training. We have had to hit the ground running.

1.2 Outline of Presentation

It is my intention, Mr. Speaker, to briefly review areas within my portfolio, which I feel are of critical importance to the country at this time. These will include:

• A brief overview of industry and measures for its expansion and development
• Our strategy for the development of the micro and small business sector;
• Food prices and their impact on our economy as well as efforts to achieve food security through the use of research and development;
• Our performance and new approach to investment promotion.

1.3 Budgetary

For the 2008/09 financial year, Mr. Speaker, the Ministry has a total budget allocation of $1,996,104,000. This includes $1,767,619,000 on the recurrent side, and capital expenditure of $228,358,000. Capital A has been allocated $160,800,000, while for Capital B, we have some $67,585,000 projected.

It is within these limits and through the recognition that we must all be held responsible for our stewardship of the people’s resources, that I am prepared and ready to be held accountable. I expect no less from the leadership of my Ministry that will manage the process.

This is the reason why each agency head has signed off on a set of targets to which we are committed to achieving, within the limits of our resources. These can be seen at the end of every agency report tabled today.

2.0 THE CONTEXT - OVERVIEW OF MANUFACTURING SECTOR

2.1 Introduction

Mr. Speaker, I would like to take a brief moment to put things in context with respect to industry so that we understand the big picture and the current state of affairs.

For the manufacturing sector, Government’s policy framework will be focused on increasing productivity, so as to drive growth. This includes the implementation of programmes and initiatives geared towards improving the human and physical capital of the sector.

The main objective is to:

• Develop export oriented industries capable of increasing the output and revitalizing the range of our manufacturing exports;
• Develop our small and medium scale industries;
• Develop our agro-industries; and
• Develop a sound support infrastructure for industrial growth.

Mr. Speaker, though many Jamaican manufacturers have faced very difficult times, the potential for the sector in the medium and long term is considerable. It is simply incorrect to say that traditional manufacturing has no future or that Jamaica should only depend on services.

Manufacturing is a mainstay of our economy and is vital for fostering a strong economy, generating employment, and guaranteeing a higher standard of living for Jamaican working families.

2.2 Trends since 2001

On average, over the period 2001 to 2006, the overall goods producing sector accounted for 35.1 percent or a little over one third of Gross Domestic Product (GDP).

2.3 Performance of Manufacturing Sector

The sector’s contribution to GDP over the past five years has averaged just over 13 percent.

In real terms, however, the sector has been on a declining trend over these years and in 2006 it actually declined by 2.2 percent in terms of actual output.

Mr. Speaker, we can sub-divide the Manufacturing Sector into “Food, Beverage and Tobacco” and “Other Manufacturing”.

The “Food, Beverage and Tobacco” sub-grouping contributed an average of 7.4 percent of real GDP from 2001 to 2006 although there was a decline of 7.1% in 2006.

A range of products in the category suffered declines. These included:
• rum and alcohol,
• carbonated beverages,
• flour, and
• condensed milk.

During 2001 to 2006, the “Other Manufacturing” sub-category contributed an annual average of just over 6% to real GDP.

2.4 Employment

The quarterly average over the period was about seventy three thousand one hundred and seventy (73,170) persons employed.

2.5 Percentage Contribution to Employment

Consistent with its fluctuating fortunes, between the January 2006 and July 2007 quarters, Manufacturing contributed a generally declining share of the total employed labour force, losing approximately one percentage point between the early part of 2006 and middle of 2007. In percentage terms, the sector contributed 6% of the labour force in 2007.

2.6 Highlights of Overview

Mr. Speaker, from the foregoing overview, there are four important observations which I want you to note:

(i) The entire goods producing sector contributes approximately a third of the country’s GDP.
(ii) The manufacturing sector employs approximately 73,000 persons.
(iii) The manufacturing sector contributes over 12% to GDP
(iv) The manufacturing sector has been experiencing a consistent decline in its contribution to GDP and employment over the years.

2.7 Strategic Focus for Manufacturing

Mr. Speaker, some persons hold the erroneous view that we cannot be competitive in manufacturing and so we should shift to services. I do not share that view. I believe that while we may not be competitive in many areas, we can be in other areas such as:
• cement
• alcoholic and non-alcoholic beverages
• furniture and wood products especially for the domestic market
• agro-processing/food processing
• apparel/fashion
• craft and souvenirs for the tourism sector

3.0 VISION AND MISSION FOR THE FUTURE

3.1 Our Vision

There are two fundamental criteria necessary for the attainment of success in any venture pertaining to nation building.

First and foremost, there must be a clear vision of what is to be ultimately achieved. This vision must have a reasonable chance of success and ought to be placed within an appropriate timeframe.

Next, the mission and set of tasks that will lead to the achievement of the vision must be clearly articulated.

These tasks must be guided by strategies which are founded on the principles of
• honesty,
• selflessness,
• integrity,
• commitment to service, and
• hard work.

It is in this context that I would like this presentation to be viewed.

3.2 Our Mission
Within the framework of the overall vision of creating economic opportunities for those left out of the mainstream of commercial activities, whilst strengthening the process by which existing businesses can grow; we have devised strategies that not only can work but must work.

Simply put, the Ministry of Industry, Investment and Commerce sees its mission as one of facilitating enterprise for employment and growth.

Specifically, this means:

• Making it easier to set up and conduct business in Jamaica;

• Eliminating unnecessary and frustrating bureaucratic red tape, which frustrates individuals, stifles initiative and restricts entrepreneurial growth;

• Addressing access to capital, which will empower the new entrepreneur who has good ideas, who lives in the inner city or rural areas, but has no collateral. Our mission is to give them the tools to enable them to achieve their full potential and take their rightful place in society as legitimate independent players.

It means:
• Strengthening our manufacturing capacity,
• our science and technology potential,
• building local industries,
• supporting Jamaican products,
• creating more jobs, and
• providing an environment that facilitates rapid and sustained growth and development.

The main plank on which this objective rests will be the development and expansion of the small and micro enterprise sector. I will say more about this later.

4.0 SMALL BUSINESS DEVELOPMENT
In many ways, Mr. Speaker, the creation of employment and growth in our country lies in the hands of small businesses. In keeping with our theme, “Facilitating Enterprise for Employment and Growth”, one of our immediate priorities is to empower and facilitate the sector through business development, funding, and other strategies. This is the cornerstone of the strategy. Through development of the small business sector, we can grow the economy, create sustainable employment and distribute income down the economic ladder.

4.1 Jamaica Business Development Centre (JBDC)
Mr. Speaker, the Jamaica Business Development Centre will be the agency responsible for driving the small business sector. The JBDC will focus on small businesses while JTI (JAMPRO) will focus on large businesses. However, since there is no sharp distinction between small businesses and large businesses, of necessity both agencies will have to collaborate closely.

The JBDC has been performing pivotal role by providing needed business development services or non-financial services which include:

• technical assistance
• support in the preparation of business plans
• training
• marketing
• management support
• etc.

Mr. Speaker, business development services to the small business sector is like extension services to the agricultural sector.

While large businesses can afford to pay for high quality consultants to provide advice, small businesses cannot afford such services. The JBDC is, therefore, the small man’s consultant. While there are several public and private institutions providing financial services, only the JBDC is providing business development services/non-financial services of any significance.

However, it is through the provision of high quality business development services that small businesses are able to improve their productivity, product quality and overall competitiveness. Hence, the JBDC has a very critical role to play in the expansion of business development services to the small business sector in every “nook and cranny” of this country.

4.2 Support for Small Business Development by other Agencies of MIIC
Mr. Speaker, while the JBDC will play the anchor role in the development of the small business sector, other agencies of my Ministry will have a role to play either directly or indirectly, in the development of the small business sector. Let me just highlight the role that the main ones will have to play.

(a) Anti-Dumping and Subsidies Commission
The Anti-Dumping and Subsidies Commission will ensure that there is no dumping of imports that can wipe out the small man. I want the Commission to play a pro-active role so that its presence can be felt. It is not only about providing information to the public about dumping. It must add value and make its presence felt.

(b) Bureau of Standards
The Bureau will provide technical support to small businesses to enable them to improve product quality and competitiveness. I have a Chairman and a Board who understand what I am talking about and we are going to see a different Bureau that adds real value to small business sector.

(c) Companies Office of Jamaica (COJ)
Mr. Speaker, there are many businesses that are operating informally. The COJ will be helping to make it easy for small businesses to become formal.

(d) Department of Co-operatives and Friendly Societies
In the case of the Co-operative Department, it is going to take a pro-active role in organizing groups of small producers into producers’ cooperatives.

(e) Factories Corporation of Jamaica (FCJ)
Mr. Speaker, the FCJ will assist in identifying suitable buildings to accommodate small businesses and structure its operation in such a manner to facilitate the expansion of the sector.

(f) Jamaica Exotic Flavours and Essences Company Ltd.
This agency, which is located in St. Elizabeth, uses the spinning cone technology to extract flavours from fruits. This is a new development and if successful, will provide a market for various fruits. Watermelon and cucumber products manufactured by the company were recently tested at the JMA/JEA Expo by Grace.

(g) Jamaica Intellectual Property Office (JIPO)
Mr. Speaker, we are well aware that creativity is the forte of Jamaicans. We have many small entrepreneurs with big ideas. We need to help the small man to commercialise these ideas and protect them. That is the role of the Jamaica Intellectual Property Office.

(h) Micro Investment Development Agency (MIDA)
In the case of financing, we have MIDA and the Self-Start Fund.

So, Mr. Speaker, the strategy is a holistic one. I have a group of agencies which will be mobilized to support the development of the small business sector. Each agency will find ways and means within the general scope of its mandate to support small businesses and assist them to grow and create employment.

(i) Scientific Research Council
In the case of the SRC, this agency will work with small businesses to improve their product quality and competitiveness, especially in the area of food processing. I will have something more to say about this later.

4.3 Business Information Centres
Mr. Speaker, I now turn to the matter of business information centres. In light of the importance of business development services or non-financial services, the JBDC will be establishing a network of business information centres island-wide. This will enable us to provide business information to the most vulnerable segment of our population: the unemployed, the frustrated and the economically deprived.

Our strategy is to provide information and a wide range of business development services to new and existing enterprises that are struggling because of a lack of resources to allow them to stabilize themselves and create jobs.

A business information centre (BIC) will be established in each parish, making it possible for existing and new micro entrepreneurs to get a fair chance to receive help in starting and developing their own businesses.

During the 2008/09 financial year, the JBDC will establish four full service business development service centres. These will be located in Portland, Manchester, Westmoreland and St. Ann.

Over time, Mr. Speaker, all existing BICs will be upgraded to provide full business development services. The plan is to have at least one full service BIC in every parish to prevent persons having to come to Kingston for business advice.

To date, the BIC programme has provided support to over 1,750 MSMEs. It is estimated that this initiative will provide support to an additional 2,500 MSMEs in the first year of implementation. However, considering the number of businesses that we need to support, we are fully aware that we need to ramp up our capacity to provide business development services island-wide.

Mr. Speaker, while the JBDC must continue to support its existing clients, my real interest is in the support provided to new clients. Consequently, I will be tracking the number of new or incremental clients supported and the type of support provided. These business information centres will enable the JBDC to expand and to reach new clients.

4.4 Business Incubators
Mr. Speaker, I want to talk now about our plans for establishing business incubators. We have developed a project known as the Incubator and Community Production Enterprises Project to support business incubators and community production enterprises. Incubators may be either publicly or privately owned and operated and both types will be encouraged. Indeed, business incubators will be an important aspect of the strategy to support the small business sector.

The main purpose of a business incubator is to reduce business failure among start-up businesses. This is important since as much as 80% of start-up businesses fail in the first few years. As with most things in life, in business only “the fittest of the fittest survive”. The objective is to spawn “fit” businesses which will survive and become competitive. A typical business incubator provides physical accommodation and varying degrees of common services, such as:
- Front desk services including telephone operator, receptionists, security
- Insurance
- Training
- Bulk purchases
- Sales and marketing
- Legal services
- Making statutory returns
- Accounting and auditing

In addition, the start-up business gets an infusion of high quality business development services which includes technical assistance, training, marketing, management support and hand-holding.

Businesses will remain for one to two years in the incubator and are then “weaned”, after which they establish operations outside the incubator. Because of the continuous training and technical support, these businesses will be stronger and less likely to fail thereafter. The vacated space will then be taken by other start-ups who would have been in waiting.
For the current financial year, three public business incubators will be established.

(a) JBDC Incubator
Only last month, Mr. Speaker, the Garmex Incubator was launched by the Hon. Prime Minister. This consists of a 20,000 sq. ft. building, which was previously retrofitted to serve the IT sector, but remained empty for over 5 years. The facility is owned by the Factories Corporation of Jamaica but the incubator will be operated by the JBDC. The FCJ made the facility available to the JBDC at a concessionary rate during the start-up phase.

The incubator will provide a suite of services to both physical and virtual tenants, initially focusing on five industries: fashion; food processing; gift & craft; information technology; and music. It is expected that this incubator will assist approximately 20 resident businesses and 200 virtual businesses in the first year.

(b) Bureau of Standards Incubator
The Bureau of Standards will be establishing an incubator at its Winchester Road premises. This is a technically strong organisation and tenants in the BSJ Incubator will benefit from the expertise in the organisation, especially with respect to product quality and standards. Businesses in this incubator will focus on light manufacturing involving wood and metal products and will receive technical support to facilitate compliance with standards requirements for production, packaging and labelling.

Cabinet has already approved the funding for this incubator. The Board and management of the Bureau have no land or money constraint with respect to this incubator and are now raring to go. I will be launching this incubator later in the financial year.
(c) Scientific Research Council Incubator
Mr. Speaker, the Scientific Research Council (SRC) will be responsible for establishing the third public sector incubator. This incubator will focus on foods and agro-processing.

Mr. Speaker, I believe in manufacturing and my strategy is to use business incubators to spawn start-up businesses, especially in manufacturing, which will be strong and able to compete. As you see, each incubator will be focusing on a particular area. I am mandating the boards of the three public sector institutions to compete and graduate businesses that are “fit” and internationally competitive. I will be taking a keen interest in the graduates of these incubators.

4.5 Community Production Enterprises (CPEs)

Mr. Speaker, I now turn to our next intervention – the Community Production Enterprises.

Under our Incubator and Community Production Enterprises Project we will be retrofitting existing facilities to accommodate individual and/or community enterprises. If a micro entrepreneur who is already in business can employ additional persons by getting access to an important piece of equipment, we could provide that individual with the equipment under a discounted lease purchase arrangement.

So, for example Mr. Speaker, if a small furniture operator wants a saw and we are convinced that if he gets the saw it will enable him to employ additional persons; we will buy the saw and lease it to him. He will make lease payments at regular intervals and at the end of the lease he owns the saw. Because the lease is discounted, he will be paying back less than the purchase price of the saw. Of course if he doesn’t perform, we will re-possess the saw and lease it to someone else. I repeat, this arrangement will empower the individual to employ additional persons.

Mr. Speaker, let us now look at a group of people in a community. Let us say that a facility is available at nominal cost and an experienced and skilled person could form a business around the facility and employ marginalized people in the community. We will work with that anchor person to form a company or a cooperative.

Accordingly, we are going to identify underutilized Government owned buildings throughout the country that can be renovated and made into productive enterprises for the people in the communities.

We will also ask Members of Parliament to identify low cost physical accommodation in their constituencies that can be renovated with funds from their Constituency Development Fund.

In the case of say, a production cooperative, the Department of Cooperatives and Friendly Societies will train the members and assist them to establish the cooperative. We will then come in and provide the machinery and equipment to the cooperative under a discounted lease arrangement.

A community production enterprise will be involved in the production and marketing of goods and services which require relatively low levels of skills or where the skills can be easily learnt.

Mr. Speaker, we are talking about goods that are simple, easy to produce and consumed in large quantities, especially locally. Typical goods could include the following:
(i) clothing/apparel (uniforms for students, police, military, nurses, linen for public institutions, school bags.)
(ii) processed foods (fruit drinks, bammy, jams and jellies, dried fruits, jerk seasonings, preparation of fresh fruits for hotels.)
(iii) furniture and wood products (school furniture, furniture for government institutions.)
(iv) metal work products
(v) craft products and souvenirs for the tourism sector
(vi) footwear
(vii) utensils, kitchen wares
(viii) costume jewellery, ornaments
(ix) Others to be identified

The main target groups here Mr. Speaker are:
• women who are heads of households
• PATH beneficiaries; and
• youths with low levels of education and skills.

Mr. Speaker, our objective is to take business to the communities and to develop the economic base of these communities. By creating employment and economic activities in the communities, mothers will be close to their children as some cannot afford day care. Plus transportation cost will be avoided and travel time reduced. Communities will be re-energized due to the increased economic activity and the multiplier effect.

Mr. Speaker, success of this model will be dependent on strong generic marketing and promotion. We will, therefore, be embarking on a strong marketing and promotion programme by collaborating with the Small Businesses Association of Jamaica. We are going to see inner city produced goods taking pride of place.

Mr. Speaker, I want to see on the labels of these goods “Made in Majesty Gardens, Jamaica”; “Made in Tivoli Gardens, Jamaica”. Our Diaspora community abroad will want to have a “T-shirt” marked “Made in Back Bush, Kingston, Jamaica” or “Made in Trench Town, Kingston, Jamaica.”

The strategy is to make people feel proud using things made in inner cities. Such goods will be ascribed a higher status like acid wash jeans since they will be “genuine inner city made” and so we will be able to charge more!

We will be encouraging businesses of a similar type to be established in clusters so it will be easy to provide technical support. Businesses will learn from one another by sharing experiences. Over time, a particular community will be known for the quality of its products and for particular products.

4.6 Financing for Small Business Sector

Mr. Speaker, having dealt with our plans for the provision of non-financial services, I now wish to turn my attention to financial services. Access to affordable capital is a challenge to small businesses and so this is an area that needs special attention.

(a) Available Funds
Mr. Speaker, you will recall that the Hon. Prime Minister announced that
$1 billion of new funds will be available to the small business sector along with $1 billion for energy efficiency and conservation projects in small businesses. There is also the $1 billion from the National Insurance Fund of which approximately $400 million is undisbursed.

There are also other Government funds lent through MIDA, Self-Start Fund, Development Options Ltd. and Pan Caribbean Financial Services. These total about $0.5 billion and bring the total amount of funds provided by the Government to something in the order of $3.5 billion – the largest the sector has ever seen from Government! To this $3.5 billion must be added other reflows from the private and public financial institutions which could be in the region of another $2 billion, making an overall $5.5 billion available to the small business sector.

Mr. Speaker, we believe that for too long there has been far too much talk and too little action in strengthening the small business sector. This year will mark a real turning point in the sustainable development of this vital sector.

(b) DBJ Micro, Small and Medium Enterprises Line of Credit
Mr. Speaker, the J$1 billion for the small business sector mentioned earlier will be wholesaled by the DBJ to approved financial institutions (AFIs) to support the micro, small and medium enterprises (MSMES). These funds are targeted at producers of goods and services established and operating in Jamaica, who are engaged in the following activities: agricultural production and processing; retooling and re-engineering; manufacturing operation; tourism; non-metallic mining; information technology; and so on.
Generally, loans will be made by the AFIs on the following basis:
• Maximum retail rate of 10%
• Loans will range between $50,000 - $15 million
• Security will vary with loan size; non-traditional collateral for micro loans and traditional collateral for larger-size loans
• Repayment period will vary with loan size.

(c) DBJ Petrocaribe SME Energy Fund
In the case of the J$1 billion for the SME Energy Fund, Mr. Speaker, these will be used for retrofitting businesses to achieve energy efficiency and conservation. They will also be used for alternative energy projects, with specific emphasis on electricity conservation and production of solar energy.

(d) Loans for Disabled Community
Mr. Speaker, on the instructions of the Prime Minister, $100 million of the new funds will be earmarked for on-lending to the disabled community for businesses. This does not mean they will be limited to this amount, but will be guaranteed access to a minimum of $100 million provided they can identify viable businesses. The details are being worked out.

(e) Creative Lending by JBDC
Mr. Speaker, the main constraint regarding access to capital by micro and small enterprises is the lack of appropriate collateral. As such, the JBDC will be introducing a new financial product to provide financial assistance to a special group of ‘un-banked’ micro and small businesses. This product must be seen as providing “financial incubation” for a targeted group of micro and small businesses. Under this programme, financial assistance will be provided only to clients who have been provided with business development services (training, business assessments, etc.) through the JBDC’s island-wide network of business centres.

The target group comprises micro and small business entities, and business groups or clusters in the productive sector. The JBDC will be applying creative lending methodologies and will not be taking the traditional collateral. This special credit window integrates lending with business development services. The interest rate to final borrowers will be 10%.

At a minimum, it is expected that the financial product will service approximately 2,500 previously un-banked MSMEs in the first year of operation.
The JBDC has applied to the DBJ to be accredited as an approved financial institution. The JBDC will also apply to the National Insurance Fund (NIF) for accreditation in order to access funds from the NIF. The amount of funds to be accessed by the JBDC from the DBJ and the NIF is not fixed and will depend on the lending capacity of the JBDC.

4.7 Interest Spread Constraint

Mr. Speaker, while what I have said earlier regarding the financing arrangements for the small business sector should go a far way, I still have a concern. Funds loaned by the DBJ with a 10% retail cap are not moving in the volume necessary to support businesses. This is because the spread of about 3% is not attractive to the retailers. Hence, my Ministry is now exploring this matter to see how we can address this constraint so that the commercial banks and other traditional lending institutions will be interested in supporting the productive sector more. Very shortly, I will be taking a submission on the matter to Cabinet for consideration. You will hear more about that.

4.8 Jamaica National Micro Credit Programme

Mr. Speaker, I would like to take this opportunity to recognize the Jamaica National Micro Credit Programme. In 2007/2008, they made 35000 loans averaging $23,000 per loan. The arrears level on the portfolio, which is in the region of $3.55 Million, is in the order of 3%. This level of arrears is very low considering that we are talking about loans to small people without any traditional collateral and with an interest rate of 1% per week (68% per annum)! I want to congratulate Mr. Oliver Clarke and his team and to assure him that I will see how he can be accommodated from the $1billion to be allocated for the small business sector or from other sources.

4.9 Private Sector Development Programme (PSDP)

Mr. Speaker, I cannot deal with the small business sector without talking about the support we receive from the European Union through the Private Sector Development Programme (PSDP) which is a five-year technical assistance programme, initiated in 2004. This programme is geared towards enhancing the competitiveness of the private sector, in response to the challenges of increased globalization and liberalization of markets. The programme is funded jointly by the European Union (EU) through the 9th European Development Fund (EDF) and the Government of Jamaica.

Targeted beneficiaries comprise:
• Micro, small and medium enterprises
• Private sector organizations and support institutions, including not-for-profit organizations that provide critical business development services to private sector firms.

The PSDP utilized the cluster concept, where direct financial assistance is given to cluster members, either individually or collectively, to enhance their competitiveness. It also provides assistance and support for institutional strengthening through the development of quality systems and technology innovation.

The PSDP has also funded important research work by Dr. David Tennant of the University of the West Indies which will inform the preparation of a small business policy. And on that note, I must express gratitude to the European Union for their support to the SME sector in Jamaica.

4.10 The Formal Economy

Mr. Speaker, I would like to make a final comment on the small business sector. Too many businesses are operating informally. The micro and small enterprises need to enter the formal economy. If these enterprises are to benefit from government supported resources, they will have to be part of the formal economy.

My understanding is that it is easy for businesses to become formal. The challenge is for them to remain formal by conforming to the relevant regulatory requirements.

The Prime Minister recently shared some statistics with us, which suggests that the vast majority of businesses and self-employed individuals are not shouldering their share of responsibilities. We need a more equitable system. There are too many free riders.

5.0 GLOBAL DEVELOPMENTS & RISE IN COMMODITY PRICES

5.1 Prices

Mr. Speaker, I wish to now shift attention to the important matter of commodity prices. Over the past months, Mr. Speaker, developments in the international economy have had a serious impact on the lives of all Jamaicans, particularly the more vulnerable in our society. These developments include:
• Increased world commodity prices, particularly for grains, oil and fertilizer;
• Competition of bio-fuels with the production of cereals and grains;
• Increased demand for certain foods by China and India;
• Market speculation;
• A slowing of output and weakening consumer demand in some developed economies, especially in the United States due to the sub-prime mortgage crisis;
• Natural disasters possibly linked to climate change

With oil now costing over US$120 per barrel – and the US and the EU trying to attain bio-fuel targets – grains, sugar and palm oil are increasingly used to produce ethanol and bio-diesel.

Rice and wheat prices soared in late 2007 and early 2008, up 60% and 89% respectively over 2007 levels.

According to the World Bank, U.S. wheat export prices rose from $375 per ton in January 2008 to $440 per ton in March. The price of rice export from the Far East increased from $365 per ton in January to nearly $1,000 per ton in April.

This came on top of a 181% increase in global wheat prices over the 36 months leading up to February 2008, and an 83% increase in overall global food prices over the same period.

It is expected that food prices will remain high in 2008 and 2009 and then begin to decline as supply and demand respond to high prices. However, they are likely to remain well above the 2004 levels through 2015 for most crops.

5.2 The Challenge that we face

Rising prices resulted in an inflation rate of 16.8 per cent for the calendar year 2007. This phenomenal situation, Mr. Speaker, is not peculiar to Jamaica, as the following report from CNN.com captioned “Economic Woes Hit American Stomachs”, indicates:

 “Steadily rising food costs aren’t just causing grocery shoppers to do a double-take at the checkout line – they’re also changing the very ways we feed our families.”

 “The worst case of food inflation in nearly 20 years has more Americans giving up restaurant meals to eat at home. We’re buying fewer luxury food items, eating more leftovers and buying more store brands instead of name-brand items.”

The impact has been felt around the world. Riots, induced by the global food price phenomenon have been reported in other countries including Bangladesh, Burkina Faso, Cameroon, Egypt, Guinea, Indonesia, Ivory Coast, Mauritania, Mexico, Morocco, Philippines, Senegal, and closer to home, Haiti.

“World Bank president Robert Zoellick has said the surging costs could mean “seven lost years” in the fight against worldwide poverty.

“In just two months,” Zoellick said, “rice prices have skyrocketed to near historical levels, rising by about 75% globally and more in some markets, with more likely to come. In Bangladesh, a 2-kilogram bag of rice now consumes about half of the daily income of a poor family.”

“This is not just about meals forgone today or about increasing social unrest. This is about lost learning potential for children and adults in the future, stunted intellectual and physical growth.”

5.3 Availability of Supplies

For the first time in two decades, Pakistan has reintroduced rationing. Russia has frozen the price of milk, bread, eggs and cooking oil for six months.

China, India, Egypt and Vietnam, four traditional rice exporting countries, have either imposed minimum export prices, export taxes or export quotas and bans. Such moves are expected to reduce rice exports from those countries.

Closer to home, “Guyana has been considering a limit on rice exports to meet local demand because of pressure to supply foreign markets struggling with a worldwide grain shortage”, according to an Associated Press article published in the International Herald Tribune on April 5, 2008.

5.4 National Co-operation

The situation calls for cooperation to deal with the consequences of the high food prices.

Now is the time for serious investment in agriculture, on a national scale, to address the long-term problem of boosting supply, and I want to endorse and commend the efforts of the Minister of Agriculture in this respect.

Secondly, comprehensive social protection and food and nutrition initiatives are necessary to meet the short and long-term needs of the poor, that is, safety net programmes for the poorest people in our society – both urban and rural.

5.5 $500 million Initiative

The Government of Jamaica took a decision in January to cushion the effect on the most vulnerable in our society by providing price support on a basket of items, basic to the Jamaican consumer.
Accordingly, a Price Support Programme valued at $500 million was implemented with the objective of stabilizing prices from mid-January 2008 through to March 31, 2008. The result was an average containment of price increases to below 3% with respect to the following basic food items over three months:
• Bulk Counter Flour
• Baking Flour (and as a result bread)
• Bulk White Rice
• Bulk Cooking Oil
• Whole Milk Powder

We consider this price support intervention a success. It serves to dampen the increases on certain basic food items and prices, generally, and to remind the market that the Government will intervene if consumer welfare is jeopardised. It tells the market that participants must be responsible and not exploit the situation.

This, more than ever before, is a time for unity, Mr. Speaker. We must join hands in dealing with this crisis. Government, Opposition and the private sector must be part of the solution to the price problem.

5.6 New Approach to Deal with Food Price Increases

(i) Forward Purchasing – We will continue to “forward purchase” as a strategy to stabilize prices of grains and cereals. We have been using it to successfully moderate prices so far.

(ii) PATH Programme
In going forward, Mr. Speaker, and having achieved our objective of overall price stabilization, we will now move to a more targeted approach. As you will recall, the Prime Minister indicated that the PATH Programme will be enhanced to provide the poor and vulnerable with cash support to meet the increased prices of food.

(iii) Jamaica Commodity Trading Company
Mr. Speaker, as you know the JCTC has been inactive for some time now and in fact was earmarked for winding-up. However, I have given instructions for the winding-up exercise to be put on hold and for a business plan to be prepared to re-activate the company at short notice, if necessary. In such a case, the Government would be the sole importer of certain commodities that are subject to wide fluctuations in prices.

The objective is to negotiate where possible, special price arrangements on a government-to-government basis where forward purchases can be made, or in instances where government guarantees may be given, to facilitate forward purchases by the private sector. Mr. Speaker, this is all in support of bringing price stability to the market.

In these circumstances, recommended selling prices will be set as was the case with the $500 million support mechanism recently undertaken by government. This could apply to any product including basic hardware materials such as steel.

Retailers who do not conform to the recommended prices would not be allowed to participate in the arrangement.

Mr. Speaker we are not living in normal times. It is therefore incumbent on all governments to use the most appropriate measures to protect the most vulnerable in their countries.

Let me therefore make it clear to all concerned, that whilst I am a disciple of the market, irresponsible behaviour by any distributor, wholesaler or retailer, that jeopardises the welfare of the consumers, will not be tolerated. I have the JCTC and Trade Act in my arsenal and will not hesitate to exercise any provision in order to protect the consumer if necessary. Make no mistake about that!

5.7 Consumer Affairs Commission

Mr. Speaker, I want to focus briefly on the performance of the Consumer Affairs Commission, which has been doing a very good job, particularly with the unprecedented increases in the prices of food items.

The Commission undertook to track more closely, the impacts at the level of the consumer. The result was that the practice of conducting monthly price surveys of thirteen basic food items was expanded to a weekly frequency for fifty commonly purchased products.

Between April 2007 and March 2008, the agency undertook 62 surveys and market surveillance activities relating to the price and availability of grocery items, petroleum products, hardware items and agricultural commodities.

This not only provided the basis for policy decisions but also provided the consumer with a list of alternative shopping outlets.

(a) Complaint Resolution (April 1, 2007 – March 31, 2008)
The Commission received 1,527 complaints during the 2007/08 Financial Year with 1,408 complaints being resolved. This represents a 92 percent resolution rate. In resolving these complaints, a total of $27.22 million was secured on behalf of aggrieved consumers. This comprised rebates, refunds and compensation. In addition, the Commission received 2,491 requests for advice on various consumer issues.

For the period, advice to consumers totalled 2,491, an increase of 961 over the previous year.

Acting on my instructions, the Consumer Affairs Commission started in December 2007, a weekly monitoring of 105 grocery and agricultural items. Additionally, ten (10) ad hoc market surveillance activities were conducted concerning the availability of cement, chicken meat, eggs; the import quantities for 12 basic food items; as well as to test whether the GCT had been removed from energy saving items previously identified as not compliant. The weekly monitoring of the 105 items will continue during the financial year.

6.0 CEMENT

Mr. Speaker, there is presently no cement shortage in the country. This is in stark contrast to the situation when I arrived at the Ministry. Inventories as at April stood at approximately 88,800 metric tonnes, compared with 24,000 metric tonnes (one week’s supply) when I just took up office.

We intend to monitor the situation carefully and remain proactive in order to ensure that the construction industry never has to undergo the nightmare of running short of this essential raw material.

I have met with the Cement Company and I am satisfied with the level of progress with the expansion programme. I look forward to the completion later this year.

7.0 SCRAP METAL TRADE

7.1 Status

Mr. Speaker, I now turn to the matter of scrap metal. We have gone a far way in regularizing the local scrap metal trade. Shortly after assuming office, one of the major tasks that I had to deal with concerned the local scrap metal trade. Several companies were reporting, multi million-dollar losses as a result of the theft of manhole covers, telecommunication cables, bridges, power lines, conveyor systems, railways lines, etc. The problem of persons stealing public and private property to be sold as scrap metal for exports had reached crisis proportions.

On October 30, 2007, I announced the suspension of all export of scrap metals, pending an assessment of the trade. The Trade (Scrap Metal) Regulations, which seeks to monitor and regulate the scrap metal trade, was tabled in this Honourable House on November 6, 2007. The penalties for breaches under the Regulations include fines and penalties for breaches; licensing of legitimate traders; and the introduction of inspectors to monitor the transportation of scrap metal.

Whilst we have seen a marked improvement in the trade and a decrease in the level of theft, I still have some concerns. I have had complaints that unscrupulous persons are still plaguing the trade. In my last meeting with the dealers on April 22nd, I made it absolutely clear that this will not be tolerated.

7.2 Additional Measures

(i) Stiffer penalties are going to be introduced. The Regulations will be amended to provide for increased fines, as a deterrent to persons who continue to steal items from the valuable infrastructure and residences of this country.

(ii) Dealers suspected of having illegal goods in their possession or their trailers will be suspended immediately. They will not be allowed to undertake any business until the suspension is lifted.

(iii) We are going to provide a reward for information on any container with illegal scrap metal. Such containers will be checked at the port. If illegal scrap metal is found, the exporter’s licence will be cancelled and he/she will not be able to export in the future. I am therefore calling on exporters to take every step to guarantee the integrity of the materials which enter their containers.

Let me again assure legitimate and honest dealers that they should have no fear. This is a trade which provides needed employment to poor people in communities such as Riverton City. Those people know that Samuda is on their side but he will not hesitate to deal with those who are stealing people’s property and disrupting business operations.

8.0 STRATEGIC INTERVENTIONS

8.1 Nation Branding

Mr. Speaker, I want to now turn my attention to the matter of nation branding. We recognize the importance of nation branding as a strategy and are already far advanced in its implementation. With nation branding we can effectively position Jamaica as a legitimate, respectable place to do business and to access world class products and services. It means managing the image of our country through a coordinated approach to achieve economic, social and cultural development. A positive nation brand is a key component in strategies to promote tourism, increase exports, and enhance investments.

A Cabinet Submission for Phase I of the initiative focused on the development of a nation branding strategy over a 12-18 month period. It will be championed by an executive committee chaired by the Prime Minister, and supported by a high-level steering committee. Simon Anholt will consult on the project.

8.2 National Export Strategy (NES)

Mr. Speaker, I now turn my attention to the business of export. Export is critical to our economy and accordingly, we have commenced work on the development of a comprehensive National Export Strategy. This activity was launched by the Honourable Prime Minister on Thursday, April 24, 2008. I want to commend the JTI team, the Jamaica Exporters Association, the International Trade Centre, the PSDP and all those who are now busily working to develop the strategy.

The National Export Strategy is a comprehensive map, so to speak, that seeks to effectively align the initiatives of various primary export stakeholders in an effort to increase the competitiveness of Jamaica’s exports, and ensure the sustainable development of our export sector. The Strategy will provide guidance in determining the priorities for exports – those industries that will generate the level of foreign exchange needed to reverse the trade deficit.

This Strategy will greatly assist in capitalising on the existing and emerging opportunities under the new EPA trade regime, which took effect on January 1, 2008.

A team of committed individuals and organisations drawn from across the public and private sectors has been constituted to form a National Export Council, which will oversee the development of the strategy and its implementation. This work is being led by JTI which has statutory responsibility for export development.

Mr. Speaker, in support of exporters, we are going to revive the Jamaica Marketing Company (JAMCO) which is based in London and give it a new mandate to facilitate the export of goods and services of small businesses. This is not to be confused with the failed JETCO which bought Jamaican goods, and in the process ran up major losses and had to be divested.

JAMCO is designed to be a service organization which will facilitate small exporters by providing information on what the market wants, linking local producers with overseas importers and assisting them administratively to export. JAMCO will, therefore, be an export facilitation agency working on the ground with small exporters.

8.3 Public/Private Sector Collaboration

The government is strongly committed to continued dialogue and partnership with the private sector and sees this approach as critical to national development and nation building. The National Planning Summit which was held in Montego Bay in November 2007 is a key component of this partnership. The Summit brought together a broad coalition of private sector leaders and public sector representatives to arrive at a general consensus on the critical initiatives that will drive economic growth and the sustainable development of Jamaica.

Following the convening of the summit last year, a Monitoring Board which is chaired by me, was established under the direction of the Hon. Prime Minister.
This Board comprises the leadership of the private sector and key government agencies namely, JTI, OPM, Port Authority of Jamaica, and the Planning Institute of Jamaica.
A programme management office has been established at OPM to drive implementation of the various initiatives, which have been identified as critical to the country’s development.

Among the prime targets of this collaborative effort is the elimination of red tape and bureaucracy in Government, the establishment of one-stop shops for development projects and the identification and packaging of major investment projects.

The projects agreed for immediate attention are the development of a Kingston Logistics Center, the Industrial Park on lands at Caymanas, an IT Park at Naggo Head, and importantly, the International Financial Centre Services Project. With respect to reducing bureaucracy, significant work is ongoing between the Cabinet Office and the Jamaica Chamber of Commerce under the “Legs and Regs” programme.

8.4 Business Facilitation

Mr. Speaker, I now turn to the matter of business facilitation. A Business Facilitation Committee will be established in time to commence working in June. This Secretariat for this Committee will be housed in JTI. It will be a problem solving committee with membership drawn from key stakeholders from the private sector as well as the main operatives from the public sector. Problems that cannot be resolved at this level will be taken to the Development Council that is chaired by the Prime Minister.

However Mr. Speaker, we have no intention of burdening the Hon. Prime Minister with problems that can be resolved at the Ministry level.

8.5 Simplifying the Bureaucracy

Mr. Speaker, closely related to business facilitation is the matter of simplifying the bureaucracy. One of our major objectives is to make it easier to do business in Jamaica. We must make it easier, not only for foreign and local investors, but also for our exporters.

Currently, it takes an average of 21 days to export a product from Jamaica – 10 days for document preparation, 4 days for customs clearance and technical control, 3 days, for port and terminal handling and 4 days for transportation and handling. What takes us 21 days, Mr. Speaker, takes 5 days for Singapore, the global benchmark. What takes us 21 days, takes 6 days for the United States, our largest trading partner, and for China and Hong Kong.

If we are to be competitive these impediments must be removed. We must reduce significantly the turnaround time for exports, as well as all other areas of doing business in Jamaica.

We intend to reduce those procedures over which my Ministry has control by 50%, by eliminating duplications and antiquated requirements where applicable. Through a process of collaboration with my colleague Minister of Finance, in particular, I know that our objective will be met.

This complicated bureaucracy was built up over time out of fear of scandals and to reduce corruption in the public sector. However, a complicated bureaucracy also, breeds corruption.

Mr. Speaker, I am convinced that to reduce the bureaucracy, we must be more risk taking. We cannot make an issue out of immaterial matters and have rules to prevent the occurrence of a potential breach which happens only occasionally. We now have a system where fear abounds and where the whole system is grinding to a halt. In this respect Mr. Speaker, I support taking risk to the very edge or brink in the interest of the higher national good. I therefore encourage my staff to take risk. Provided the intent is genuine, I will stand behind them because I oppose complication and non-value added regulatory processes.

8.6 Public Procurement

Mr. Speaker, the Government will be moving to implement a policy that will give preferential treatment to local firms with respect to certain public sector contracts below a specified threshold. This is intended to specifically assist the small business sector because we want to enable small businesses to get a fair share of government purchases.

My Ministry will be working closely with the Ministry of Finance and the Public Service to present a submission to Cabinet on this matter before the end of June, 2008.

Mr. Speaker, I look forward to the pleasure of announcing this policy as it is very dear to my heart and I would love to see the small man “get a break”.

9.0 MEASURES FOR EXPANSION OF INDUSTRY

Mr. Speaker, I now turn my attention to measures to improve the business environment so that businesses can expand and grow.

9.1 Competitiveness

Let us look at the matter of competitiveness. According to the Global Competitiveness Report 2006-2007, which looked at 125 countries, Jamaica ranked 60th in growth competitiveness and 54th in the Business Competitiveness Index. In the previous year’s report, Jamaica ranked 70 out of 117 countries in the Growth Competitiveness Index, and 53rd in Business Competitiveness. Many of the general and sub-indices rankings assigned to Jamaica clearly demonstrate the need for improvements in our competitiveness, and most of these may be addressed by improving our macroeconomic and business environments.

The significance of these competitiveness indices is that there are correlations between them and economic and social indicators. Some of the relationships that have been demonstrated, Mr. Speaker, and the conclusions made, include:
(i) A nation’s prosperity is strongly affected by the productive use of its human, capital and natural resources;
(ii) The quality of the national business environment is proportional to the level of company sophistication;
(iii) Innovative capacity is related to per capita GDP;
(iv) Strength of institutions is crucial
Our competitiveness is linked to our labour productivity. Jamaican labour is far too unproductive for a world of globalization. The truth of the matter Mr. Speaker, we are simply not “fit” for a globalized world. That is why we cannot grow our economy like others have done. We must remember that only the “fittest of the fittest” will survive in the long run.

In light of this Mr. Speaker, permit me to give businesses a five point lecture on what I consider to be critical in the building of competitiveness.
(i) You need to retool and modernize your plant – Technology helps to make labour more productive. A worker with good tools and technology will be more motivated because work is easier. The $1 billion small business loan is intended to assist you to retool and modernize
(ii) Focus on staff development - The business must be like a school and must become a learning organization. It must facilitate learning. The most important asset in a company is its workers. Invest in the development of your workers. Set training and development targets for each member of staff – from the CEO right down to the lowest level in the business. Evaluate each worker at intervals to see if he/she is growing and improving

(iii) Establish Standards – Set standards for everything and monitor closely

(iv) Encourage Creativity - Encourage “out of the box” thinking in the organisation. Encourage people to try different ways of doing things so there can be continuous improvements. Most of all, do not crucify them when they fail. Give them a chance to learn from their mistakes and try again. This is where we fail in the public sector! Everything is seen as a scandal and so people err on the side on caution. This stifles creativity and development

(v) Build Peace and Harmony at the Work Place - A house that is divided cannot stand rough times! People must look forward to going to work and must be motivated around business objectives. Workers spend more waking hours at work than in their homes. Their quality of life will improve if they enjoy their work.

Mr. Speaker, improvement in productivity is critical for growth and elevation in the standard of living and I will be joining forces with the Ministry of Labour and Social Security to say more on this important matter.

9.2 New Focus on Science, Technology and Innovation

Mr. Speaker, I aim to see under my leadership a new and more sustained focus on science and technology in Jamaica. Our aim is to make the best use of our science base, utilize technology from a range of sources, and demonstrate the benefits which accrue to innovative companies or individuals.

Against this background, Mr. Speaker, the Scientific Research Council has a leading role to play in assisting our small and micro enterprises, developing new and innovative products, carrying out training, and fostering the commercialization of technologies.

(a) Case Studies
I want to share with you now, Mr. Speaker, two inspiring case studies that tell a story of how we can move from a concept to a final product with commercial value and consumer appeal.

(i) Fish Products
Nearly ten years ago a qualified chemical technologist approached the SRC with a business idea for a line of smoked fish products for the market. This person had neither the facilities nor the specific technical know-how to concretize her vision, but identified the SRC as the logical choice to work with.

The Council set about preparing a proposal for product development and technical services to produce smoked fish steak, smoked fish fillet and smoked jerk fish products for the market. The SRC worked along with this entrepreneur for eight years, Mr. Speaker, assisting in a comprehensive manner, from the product development proposal I just mentioned, to identifying credit facilities for the fledgling but viable business.

That business concern, Coral Cuisine, now operates out of a 2,500 sq. ft. facility equipped in modern fashion. It employs a staff of six and produces about 900kg of high quality fish products a month for hotels.

The market response to the product line has been most favourable, as evidenced by its 99.5 percent acceptance rate.

In response to such positive reaction, plans are now afoot to retail the product line in supermarkets and expand the market beyond our shores to other Caribbean islands.

There is no compelling reason why we cannot replicate this approach by the thousands to put ideas on terra firma and help get small businesses moving, and I might add, functioning at a standard that meets the most stringent international requirements.

(ii) Wastewater System
Then there is the case of the environmentally friendly wastewater management systems developed by the SRC. The Council has worked for over ten years with German and Dutch experts to develop this technology for Jamaica. But here I will not speak of achievements at the level of an individual business concern but just give an idea of how this technology is being proliferated.

Basically, Mr. Speaker, the technology speaks to anaerobic or oxygen-free treatment of waste and it has a number of advantages. For one thing, construction and operation are simple and therefore relatively cheap. Then, the biological process for breaking down waste does not require electricity; so there we have an important cost saving. Moreover, the method is scalable, so it can be done on a very small scale or very large scale depending on the magnitude and demands of the facility it serves.

The SRC has partnered with housing developers, agro processors, including rum distillers and meat processors, and farmers, to establish over two hundred bio-digester systems, including sixty bio-digester septic tank systems, and another sixty or so gravel filter beds/reed beds/evapo beds.

Here, we see the practical application of simple, cost effective technology that can work for both residential and commercial facilities. It is a commendable approach in light of spiralling energy costs and financial constraints to rolling out large scale centralized infrastructure.

(b) Support to Large Businesses
The Council also continues to play a role with the medium and large enterprises. By terms of the diversification of traditional agricultural commodities, the Council is carrying out contract research and development activities on behalf of these companies.

Additionally, the SRC has already been engaged in services such as Schedule Processing, Nutritional Labelling, Nutrient Analysis, Sensory Evaluation, Shelf Life Studies and Demand Studies on behalf of larger more established clients.

(c) Intensified Focus on the Commercialization of Technologies
Mr. Speaker, the SRC, is giving greater focus to the showcasing of technologies and formulations available for sale. As such, the Council has already prepared Opportunity Profiles for several of its product formulations which were promoted at the JTI’s “Opportunities 2007” Expo. These profiles will be used at trade shows locally and overseas as well as promoted on the JTI’s website. The Diaspora is a special group being targeted for some of the indigenous products formulated for sale by the SRC.

Commercialization strategies, including exclusive sale of technologies, have been employed by the SRC in releasing its innovations in the public domain. The recent “Real Jamaican Mannish Water” – a canned, authentic Jamaican product was subject to such a sale, and has set the stage for several more of the same.

The SRC’s Certification Mark (CM) depicting quality and safety is another strategy being utilized to benefit both the manufacturer and the Council (the latter through increased visibility). Licensing the use of the Council’s mark, as well as the patent for the BST is being promoted for the commercialization of relevant products of the SRC.

10.0 INVESTMENTS

10.1 Strategic Shift in Investment Promotion

And now Mr. Speaker, I have left the best wine for last. It is the wine of Investment! Investment is critical for growth. Without investment we will not be able to grow the economy. Against this background, I have re-focussed the Jamaica Trade and Invest which has primary responsibility for investment.

JTI will now return to its core business of investment promotion and trade facilitation for which measurable targets have been established. JTI will focus on large businesses while the Jamaica Business Development Centre will focus on small businesses.

The agency will also be required to put greater emphasis in promoting investments dealing with the production of goods to boost the manufacturing sector.

10.2 Investment Packaging

JTI will also be undertaking the packaging of investment. We must undo our competition by attractively packaging our investment opportunities. That is, instead of inviting investors to look at our investment portfolio, we must package our investment and market them in the board rooms of large overseas businesses.

In this respect, JTI will be re-oriented in terms of its promotion strategy. The agency will have to market specific projects or developments abroad. Projects will therefore be conceptualized for specific locations, showing proposed infrastructure layout, with artists’ impressions, of the types of businesses in sophisticated multi-media formats.

It is also intended for JTI to collaborate with the relevant agencies responsible for zoning and subdivision approvals in order to present pre-approved project proposals – a kind of turn-key approach to investment promotion.

10.3 Missions

JTI will increase its overseas missions to mobilize foreign direct investment. These will revolve around the trade missions to Europe, Latin America, North America, and the Far East commencing this month when we are going to the UK and other parts of Europe. In July we will also be going to Dubai and major cities in Europe as part of our investment promotion thrust.

In addition, investment promotion will revolve around the expansion of trade missions to include New York, Toronto, Brussels, and Panama.

The proposed locations and establishment schedule for JTI overseas offices are as follows:

Location Target Establishment Date

    USA, New York (Embassy) 2nd Qtr 2008/2009
    Ottawa or Toronto, Canada (Embassy) 3rd Qtr 2008/2009
    Brussels, Belgium (Embassy) 4th Qtr 2008/2009
    Brazil 1st Qtr 2009/2010
    Beijing, China (Embassy) 1st Qtr 2009/2010
    India 1st Qtr 2009/2010

10.4 Investment Facilitation

• Jamaica Trade and Invest (JTI) facilitated unprecedented investment capital expenditure (CAPEX) inflows of $22.3 billion as at the end of April 2008. CAPEX is a measure of the volume of cash flow in foreign direct investments in the country
• In terms of the jobs created by these investments, JTI exceeded its target of 7,000 jobs to facilitate the creation of 7,277 jobs, as at April 2008 through the increased number of investment projects
• Developing the absorptive capacity of the Jamaican economy is a major priority of the Government, and it is critical that the flow of foreign direct investment into the island be increasingly linked to the local business community. The figures point to increasing numbers of Jamaican businesses being engaged in service and supplier contracts with foreign investors. JTI facilitated the signing of 20 business linkage contracts for the 2007/08 review period.

10.5 Investment Targets and Sectors

Mr. Speaker, For the financial year 2008/09 Jamaica Trade and Invest targets some $20 billion in investment, as well as 9,000 permanent and temporary jobs. However, to achieve this target, we must address the bureaucratic hurdles.

Broadly, the investment promotion strategy is to leverage existing and potential business relationships to drive Jamaica’s advance towards high-end, high-impact job-creating, sustainable niche investments from local and overseas sources. Thus, specific strategies have been formulated for each of the seven (7) sectors in which the organisation carries out direct interventions.

The sectors are:
• Tourism, where the JTI is focusing on a product diversification strategy, to include upscale investments in boutique properties and new and creative attractions
• Creative Industries where a cluster-based approach will be undertaken by JTI as it showcases Jamaica’s multi-dimensional creative talents in music, film, entertainment and other areas
• Information and Communications Technology (ICT), where the product development strategy is being advanced to ensure that the ICT industry moves further up along the value chain for outsourced services
• Manufacturing: where the JTI is pursuing a strategy of modernization and product diversification
• Minerals: where higher valued export-oriented production is being sought from the minerals industry, particularly in the area of limestone
• Agriculture: where the focus is specifically on product development, especially development of high value-added niche opportunities such as West Indies Sea Island Cotton and high-end greenhouse technology

10.6 High Priority Projects

Mr. Speaker, let me share with you some of the exciting projects which we will be pursuing during this Financial Year:
(i) Ocean Point Development, St. Mary - This is a luxury/heritage, low density ecotourism development for celebrities and other exclusive clients. Approximate projected investment is US$100 million

(ii) Negril Peninsula, a luxury mixed-use development that will provide approximately 6,702 habitable rooms, on 361 acres of lands in Negril. The projected capital expenditure is over US$1 billion

(iii) Amaterra, an 865-acre beachfront property, with projected capital expenditure of US$1.2 billion

(iv) Alcovia Project /Tranquillity Cove, St. Mary, with capital expenditure projected at US$8 million

(v) The Rinker Group of the USA has now signed agreements with JAMALCO and Chemical Lime for port and raw material access in support of plans to build a large-scale quarrying operation in Clarendon, with an export capability of 8-10 million tons per annum. Projected capital expenditure amounts to US$300 million

(vi) Vista Print (Expansion), Montego Bay Free Zone, a contact centre specializing in graphic design. Projected capital expenditure amounts to US$25 million with 1000 jobs to be created

(vii) International Financial Centre - We will be undertaking work aimed at establishing an international financial centre in Jamaica. It is anticipated that a full-time consultant will be engaged soon to finalize the entire package to make it attractive to the international investing community. JTI is playing a critical role as the secretariat for this initiative.

10.7 Investments to be Packaged

(a) Montego Bay Free Zone
Mr. Speaker, the Montego Bay Free Zone is to be packaged and sold. We will be disposing of all uneconomical properties owned by the Factories Corporation of Jamaica and that process has already started. It is not the intention of Government to run business; we are here to facilitate business.

For the Financial Year 2008/2009, the Factories Corporation of Jamaica will continue managing its inventory of land and buildings to facilitate industrial and commercial activity across the island.

The FCJ will maintain focus on business sectors with proven growth potential, and during this period, Factory #4 at the Montego Bay Free Zone will be sold to the Port Authority of Jamaica. Factories 5, 6, 7 and 8 will be leased, primarily for manufacturing and ICT purposes. Three (3) new buildings are slated for construction - two (2) in the Corporate Area and one (1) in Christiana, Manchester - to accommodate the demand for factory and warehouse space.

(b) Logistical Centre
We are also going to be looking for investors with the objective of creating a massive logistical centre, including a free zone. This is a project of the Port Authority of Jamaica being done in collaboration with the Ministry of Foreign Affairs & Foreign Trade, which is now making arrangements to establish a mission in Panama to take advantage of the facilities of the Canal. This will enable Jamaica to benefit from the development of our own ports.

(c) Caymanas Multi-Purpose Industrial Park
Finally, Mr. Speaker, I would like to share with you my dream and a key element of my mission. Mr. Speaker, I invite you to picture 500 acres of land, located by Ferry off the Mandela Highway, being developed into a major economic zone.

Immediately, we can see the advantages of this location:
- Strategically positioned close to Kingston;
- Close to the most sophisticated infrastructure; airports, (Tinson Pen, Vernamfield), ports, highways;
- Proximity to Portmore, the largest community in Jamaica; and
- Proximity to Spanish Town, the old capital.

Clusters of related industries, and support industries including the following, will be located in the Park:
- Agro-industry
- Food processing
- Light manufacturing
- Export manufacture
- Craft
- Electronic assembling
- Pharmaceutical
- Warehousing
- Logistics
- Software
- Telecommunications.

These clusters will serve micro, medium and small businesses, along with special provisions for large scale investors, in areas such as electronics and information technology.

In clusters – in different blocks – there will be large, medium, small, and micro businesses, similar to models in China, but in the case of Jamaica the focus will be on goods and services to satisfy niche markets and the Diaspora.

The surrounding farming communities will not be excluded. They will be encouraged, through contractual arrangements, to supply the necessary raw material for agro processing and other related activities. These communities, along with Portmore, provide a ready labour and skill pool for businesses in the park.

We expect the private sector to play a lead role in the construction of this development, particularly those in high tech telecommunications and infrastructural services.

Already, Flow, a significant telecommunications provider, has commenced the process towards the purchase of 5 acres of land in the subject area for an operation centre.

The public sector, particularly through the Factories Corporation of Jamaica, will play a role through the provision of factory space for lease to small agro-processors and manufacturers.

We are now moving to have the area appropriately zoned to accommodate industrial/commercial developments and have been in consultations with the relevant stakeholders to secure the necessary permits and approvals.

This is a major development, Mr. Speaker, which we believe is a necessary component in our industrialization programme. A key component of our manufacturing strategy, therefore, will be the promotion of industrial parks and we will be accelerating our efforts to offer more industrial sites, as well as factory/warehousing space.

11.0 CONCLUSION

We believe, Mr. Speaker, that the foregoing provides us with the best means laying a firm foundation on which to achieve economic growth. These strategies are not simply designed around commercial objectives but, when achieved, will also contribute to social stability and, critically, the reduction of crime.

Our objective is to create wealth to achieve a shift from reliance to self-reliance. It is Government’s responsibility to establish a framework within which every person in the country can achieve his or her full potential.

This is not a Political strategy, but a national strategy that must include all Jamaicans and enjoy the support of all Jamaicans. We look forward to having constructive dialogue with the Opposition in the hope that we can achieve a consensus on the national imperatives.

I thank you.

 

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